Time for Forestry Roading Levy

John Kape

COLUMN

The Eastland Wood Council has asked our council to support a regional fuel tax. This could increase the price of fuel by up to 10 cents a litre, and transfer the forest industry’s roading costs on to other road users.

Jacinda Ardern has rejected the idea, saying there will be no new regional fuel taxes while she is Prime Minister. That will provide some relief to local road users already hit by rising fuel prices.

But it would not be the only way we are being taxed to pay for the forest industry’s roading costs.

In 2018, rates rose in the city by an average of 7 percent. This has hit many households on low and fixed incomes. In 2018/19 this additional rate is largely going to increase the roading budget, in particular for forestry routes and back-country roads.

The ratepayer is effectively subsidising forest routes by $2-4 million per year. This includes the cost of damage to local roads attributable to the high volume of logging trucks. It also includes the cost to fund the local share of upgrading roads to enable forest harvest. It does not include the additional safety cost from the high number of logging trucks on narrow roads. It also does not include the cost of noise, vibration and dust experienced by those living on forestry routes.

The forestry industry may argue it pays its own roading cost through road user charges. There is some truth to this. However, road user charges do not pay for the “local contribution” required to fund our roads, which is met by the ratepayer.

In 2017 the council recognised the unfairness of this forest roading subsidy for the ratepayer. It agreed to investigate the introduction of a levy, which could for example include a charge of $1 per tonne of logs delivered to the port. This showed foresight by the council. It holds the forestry industry responsible for its own roading costs. However, to date no levy has been imposed.

There are other mechanisms to enable industry funding. For example, the council could invoice the industry for the costs of a local road upgrade needed to enable forest harvest. However, this option falls well short as it would not cover the ongoing cost of damage to our roading network caused by the high volume of logging trucks. It would also leave it at the council’s discretion to make the charge.

Some may argue that upgrade of forestry roads has a high degree of public good. This argument is technically incorrect. There can be wider public good in enabling ongoing road access for all road users. However, a forest route upgrade is beyond this. It is designed to enable forest harvest. The benefit is almost entirely consumed by the industry. Sometimes the road is left in bad condition.

The Government has recently come to the forest industry’s aid, offering to pay most of the costs needed to upgrade forestry routes over the next five years. This potentially provides us a window of opportunity to get the Forestry Roading Levy in place.

A port log levy is the most efficient way for the industry to fund its own roading costs and to shift the burden of the industry’s costs off the ratepayer. Bear in mind, this is an industry on track to export up to 4 million tonnes of logs each year, earning around $400 million. It has much greater revenue than the council.

It’s time for our council to let the community know where it has got to on the time frame for introducing a levy, and to end the ratepayer subsidy of forestry routes.

The Eastland Wood Council has asked our council to support a regional fuel tax. This could increase the price of fuel by up to 10 cents a litre, and transfer the forest industry’s roading costs on to other road users.

Jacinda Ardern has rejected the idea, saying there will be no new regional fuel taxes while she is Prime Minister. That will provide some relief to local road users already hit by rising fuel prices.

But it would not be the only way we are being taxed to pay for the forest industry’s roading costs.

In 2018, rates rose in the city by an average of 7 percent. This has hit many households on low and fixed incomes. In 2018/19 this additional rate is largely going to increase the roading budget, in particular for forestry routes and back-country roads.

The ratepayer is effectively subsidising forest routes by $2-4 million per year. This includes the cost of damage to local roads attributable to the high volume of logging trucks. It also includes the cost to fund the local share of upgrading roads to enable forest harvest. It does not include the additional safety cost from the high number of logging trucks on narrow roads. It also does not include the cost of noise, vibration and dust experienced by those living on forestry routes.

The forestry industry may argue it pays its own roading cost through road user charges. There is some truth to this. However, road user charges do not pay for the “local contribution” required to fund our roads, which is met by the ratepayer.

In 2017 the council recognised the unfairness of this forest roading subsidy for the ratepayer. It agreed to investigate the introduction of a levy, which could for example include a charge of $1 per tonne of logs delivered to the port. This showed foresight by the council. It holds the forestry industry responsible for its own roading costs. However, to date no levy has been imposed.

There are other mechanisms to enable industry funding. For example, the council could invoice the industry for the costs of a local road upgrade needed to enable forest harvest. However, this option falls well short as it would not cover the ongoing cost of damage to our roading network caused by the high volume of logging trucks. It would also leave it at the council’s discretion to make the charge.

Some may argue that upgrade of forestry roads has a high degree of public good. This argument is technically incorrect. There can be wider public good in enabling ongoing road access for all road users. However, a forest route upgrade is beyond this. It is designed to enable forest harvest. The benefit is almost entirely consumed by the industry. Sometimes the road is left in bad condition.

The Government has recently come to the forest industry’s aid, offering to pay most of the costs needed to upgrade forestry routes over the next five years. This potentially provides us a window of opportunity to get the Forestry Roading Levy in place.

A port log levy is the most efficient way for the industry to fund its own roading costs and to shift the burden of the industry’s costs off the ratepayer. Bear in mind, this is an industry on track to export up to 4 million tonnes of logs each year, earning around $400 million. It has much greater revenue than the council.

It’s time for our council to let the community know where it has got to on the time frame for introducing a levy, and to end the ratepayer subsidy of forestry routes.

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Winston Moreton - 10 months ago
GDC will continue to sit on its hands because Mayor Foon and his ECT trust colleagues (all well paid) benefit from the free ride on the general taxpayer. Already the govt has paid up extra for local roading costs (nationwide road-user taxes) and govt does not realise ECT (as chief shareholder in the port) is the direct beneficiary. If a levy goes in (excellent idea by the way John Kape) it will reduce ECT profit, but so what. ECT money is exported out of Tairawhiti while the real beneficiaries of the trust suffer higher and higher petrol bills. In addition, the port is gearing up to take two ships at once so that will bring a massive increase in logs. Better to consider sending some logs out by rail. Safer for other motorists too.

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